The owner of the second-largest U.S. liquefied natural gas (LNG) export plant has not yet provided regulators with a final repair plan, according to a person familiar with the matter, likely pushing any restart into the first quarter of next year.
The outage since a fiery explosion in June has underscored the global demand for new gas supplies and required major LNG traders and customers of the roughly 16 million tonne per year processing facility to buy replacement cargoes at huge markups.
Freeport LNG had pledged in August to restart gas-processing by early to mid-November, and to be above 85% of full capacity by month's end. It had aimed to reach 100% of capacity by March, 2023.
The company's November target "is not credible, nor is a December restart," said Rapidan Energy Group consultant Alex Munton in a note. He puts a resumption of gas processing in the first quarter of next year "with longer delays possible."
U.S. gas prices NGc1 pared gains on rumors Freeport's restart would be delayed. After rising over 8% earlier on Monday on cold forecasts, futures were up less than 1% following the Freeport news.
The U.S. regulator overseeing repairs on Monday had not received Freeport LNG's full repair plan, sources familiar with the company's filing said. Pipeline Hazardous Materials and Safety Administration (PHMSA) had said last month it will not authorize a partial restart until all proposed changes are received and accepted.
Rapidan's Munton said in an interview that PHMSA's review of the repair work, called Remedial Work Plan (RWP), will take at least a month and could take longer because of the approaching U.S. holidays.
The close-held company declined to comment on when it expects to submit the required work plan to PHMSA or when it could restart processing operations.
"We are continuing our work of processing toward the safe restart of our facility, which includes obtaining the necessary approvals," said Freeport LNG spokesperson Heather Browne.
PHMSA's past review of a Cheniere Energy Inc storage-tank repair suggests it could take weeks to review Freeport LNG's plan, and could require additional information, Rapidan's Munton said.
Cheniere, the largest U.S. LNG exporter, had submitted its tank-repair plan to PHMSA in September 2018 and a request for final determination a few weeks later. The plan was returned as insufficient and the rejection upheld in February 2019.
The PHMSA administrator who had rejected Cheniere's repair plan will have final say over Freeport LNG's RWP, Munton said.
The uncertainty and missed dates have swung natural gas markets wildly. Commodities regulators could investigate the market swings from unsubstantiated Twitter posts on the plant restart last week, analysts at energy consultants Gelber & Associates wrote on Monday.
The restart reports "exaggerated volatility in prices and turned a bullish move in prices (on Nov. 11) into a hefty sell-off," in gas futures, according to the consultants, who said a Twitter post "appeared to be purposefully planned to instigate a sell-off in gas futures prices."
There were LNG tankers waiting outside of Freeport, Texas, to pick up LNG, according to Refinitiv vessel tracking data. Prism Diversity and Prism Courage were offshore from the plant, while LNG Rosenrot and Prism Agility were expected to arrive in late November.
One vessel, Prism Brilliance, which had been waiting off the coast of Freeport, moved to anchorage outside Corpus Christi, Texas, where Cheniere has a large LNG export plant, according to Refinitiv data.
(Reuters - Reporting by Scott DiSavino; editing by Jonathan Oatis and Lisa Shumaker)